Elon Musk Is Turning Off Would-Be Tesla Buyers

Good morning! It’s Monday, April 1, 2024, and this is The Morning Shift, your daily roundup of the top automotive headlines from around the world, in one place. Here are the important stories you need to know.

1st Gear: Elon Musk Scares Off Potential Tesla Owners

Elon Musk is turning off a hell of a lot of potential Tesla buyers in the U.S., according to a survey from market intelligence firm Caliber. Because of that, the overall pool of potential Tesla buyers is shrinking. Tesla may have posted strong sales growth last year, but the Austin, Texas-based automaker is expected to post a rather weak quarterly sales report sometime this week.

Caliber’s “considering score” for Tesla fell to just 31 percent in February 2024. That’s a massive drop from the 70 percent high in November of 2021 when it started tracking consumer interest in the automaker. From Reuters:

Tesla’s consideration score fell 8 percentage points from January alone even as Caliber’s scores for Mercedes, BMW and Audi, which produce gas as well as EV models, inched up during that same period, reaching 44-47%.

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Musk in the past has blamed high-interest rates for curbing consumer demand for big ticket items like cars.

Caliber cited strong associations between Tesla’s reputation and that of Musk for the scores.

“It’s very likely that Musk himself is contributing to the reputational downfall,” Caliber CEO Shahar Silbershatz told Reuters, saying his company’s survey shows 83% of Americans connect Musk with Tesla.

Reuters spoke to five marketing, polling and car experts who said controversies surrounding Musk’s increasingly right-wing politics and public statements are weighing on Tesla’s brand and demand.

“It is hard enough to win sales without getting into politics,” said Tim Calkins, a marketing professor at Northwestern University’s Kellogg School of Management.

It isn’t just Elon Musk freaking people out, though. Economic fears, a lack of affordable new models and stronger competition have been cited by Wall Street analysts as issues facing Tesla.

Overall electric vehicle sales in the U.S. are forecast to increase 15% in the first quarter of this year, according to estimates by researcher Cox Automotive. Tesla sales are projected to increase by 3%.

“The EV slowdown is shaping up to be a Tesla slowdown,” Cox analyst Stephanie Valdez Streaty said during a conference call Thursday.

New car registrations for Teslas in California- their biggest market in the U.S. – posted their first drop in over three years in the fourth quarter of 2023 even as EV sales rose overall.

At least five analysts cut Tesla’s target price last month, saying the automaker could post disappointing first-quarter delivery results. Tesla shares are down nearly 30% year to date.

Musk’s outsized personality benefited Tesla as he promoted tackling climate change by reimagining cars as stylish, electric computers on wheels that could beat gasoline guzzlers in looks, performance and handling.

Over the past few years, Musk has welcomed controversy with shitty comments and actions on his social media site, X (still Twitter in my heart). Lately, he has been very big on anti-semitism and transphobia. Not cool, man.

When asked by an investor during a January 2023 conference call if his political comments were hurting Tesla’s brand and sales, Musk said he was “reasonably popular,” referring to his then 127 million followers on X, formerly known as Twitter.

“Whether you hate me, like me or are indifferent, do you want the best car, or do you not want the best car?” Musk said at another event in November.

Brand valuation consultancy Brand Finance found Tesla’s reputation fell in 2023 in the United States, the Netherlands, France, United Kingdom, and Australia. Tesla’s reputation did not suffer in China, where access to news on the company and its CEO may have been limited, and Germany.

In the U.S., a survey by consumer analytics firm CivicScience shown exclusively to Reuters found that 42% of respondents had an unfavorable view of Musk in February, up from 34% in April 2022 when Musk disclosed his stake in Twitter.

“A modest but growing number of EV shoppers are increasingly put off by Elon Musk’s behavior and politics and are now finding viable alternatives to Tesla in the marketplace,” Ed Kim, president of California-based consultancy AutoPacific said.

This latest revolution probably will not change anything in Musk’s behavior, but at least it’s nice to see that people aren’t falling for his bullshit anymore. Well, at least not as many people aren’t falling for it.

2nd Gear: U.S. Tightening Tailpipe Emissions For Heavy-Duty Vehicles

The U.S. government is finalizing tighter tailpipe emissions standards for heavy-duty vehicles like 18-wheelers and buses. While still strict, the new rules wouldn’t be as strict as those initially approved in 2023. You win some, you lose some. From Reuters:

The Environmental Protection Agency (EPA) said the new rules setting standards for the 2027 through 2032 model years will avoid 1 billion tons of greenhouse gas emissions through 2055 and provide $13 billion in annualized net benefits to society. In contrast, the EPA had said its tougher proposed rules last year would have prevented 1.8 billion tons of emissions.

The new standards apply to delivery trucks, garbage trucks, public utility trucks, transit, shuttle, and school buses and tractor-trailer trucks.

The final standards tighten requirements at a slower pace and delay the start of new rules for day cab tractors and some heavy-duty vocational vehicles, the EPA said.

Heavy duty vehicles account for 25% of all greenhouse gas emissions from the transportation sector, which accounts for 29% of U.S. greenhouse gas emissions.

The EPA said the standards “are technology-neutral and performance-based, allowing each manufacturer to choose what set of emissions control technologies is best suited for them and the needs of their customers.”

The final rule includes lower electric vehicle projected sales rates for model years 2027-2029 than the original proposed rule would have required. But an industry group argued the rule was still too strict.

The Truck and Engine Manufacturers Association, which represents Daimler Truck, Volvo Trucks, Cummins and others, said it was concerned “the final rule will end up being the most challenging, costly and potentially disruptive heavy-duty emissions rule in history.”

The association added the new rules set a percentage of zero-emissions vehicles such as fuel cell-powered or electric vehicles that a company must sell, “which is beyond their own ability to control.”

Some feel that the rules do not go far enough.

Tesla, some Democrats and environmental groups had urged the EPA to adopt even tougher rules.

Abigail Dillen, president of the Earthjustice environmental group, said Friday “the EPA did not go far enough to protect communities from dangerous health impacts linked to heavy-duty truck pollution” and added “truck manufacturers have pushed EPA to slow-walk this change.”

Predictably, some feel it still goes too far.

The American Trucking Associations said targets beyond 2030 “remain entirely unachievable given the current state of zero-emission technology, the lack of charging infrastructure and restrictions on the power grid.”

Current tailpipe emissions limits for heavy-duty trucks and engines were set all the way back in 2016, and it covers the 2021 through 2027 model years.

3rd Gear: Mitsubishi, Nissan Team Up For U.S. Vehicles

Nissan and Mitsubishi are joining forces on some bespoke products for the U.S. It’ll be the first major cross-company vehicle collaboration between the Japanese automakers aimed at the U.S. market. From Automotive News:

Nissan will launch its first North America plug-in hybrid, based on a system engineered by Mitsubishi. And Mitsubishi will launch a local product using Nissan’s electric vehicle technology.

Meanwhile, Nissan and Mitsubishi will jointly develop a next-generation pickup to be produced in Mexico. Full-electric and plug-in hybird versions of that truck are under consideration.

The 1-ton pickup would likely land as a successor to the Nissan Frontier.

That vehicle could also expand Mitsubishi’s local lineup with the midsize pickup that U.S. dealers have clamored for. Mitsubishi’s Triton pickup is sold overseas, but the carmaker is stymied in bringing it stateside because the Triton faces a stiff 25 percent tariff on imported light trucks.

Building such a pickup in Mexico would allow shipment to the U.S. and Latin America.

Mitsubishi and Nissan have been in a corporate alliance since 2016. That’s when Nissan bought a 34 percent stake in Mitsubishi following an emissions cheating scandal.

Nissan and Mitsubishi have long partnered on minicars, both electric and gasoline, for the Japanese market. Mitsubishi also borrowed the platform and engine of the Nissan Rogue crossover for the latest generation of its Outlander for global markets.

Yet, big joint projects targeting North America haven’t been a priority.

Nissan’s CEO said the partnership is important for filling “strategic gaps.”

In North America, that means working with Mitsubishi on the next-generation 1-ton pickup and launching a plug-in hybrid together. Mitsubishi, he said, will “utilize Nissan EV assets” there.

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The plug-in hybrid would be Nissan’s second plug-in globally, following a crossover for China based on technology from Nissan’s joint venture partner there, Dongfeng Nissan. That vehicle, sold under the China-market Venucia brand, went on sale last July.

Nissan has no hybrids in its U.S. lineup. The brand was caught flat-footed by the uptick in U.S. demand for gasoline-electric hybrids amid slowing sales growth for EVs.

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Further down the road, Nissan and Mitsubishi will introduce the jointly developed pickup. The companies are still discussing the potential for EV and plug-in hybrid variants, Chief Planning Officer Ivan Espinosa said.

The pickup is expected to arrive between March 31, 2027, and March 31, 2031, he said.

It’ll be interesting to see what two of the most mundane automakers out there can do when they put their heads together. I’m sure it’ll be something remarkably fine.

4th Gear: Tesla Raises Model Y Prices By $1,000

Tesla raised the prices on all trims of the Model Y crossover in the U.S. by $1,000.

The Model Y base variant will now cost $44,990, while the long range and performance variants are priced at $49,990 and $53,490, respectively, according to the Tesla website.

Tesla had said in March that it will increase prices for all Model Y cars in the United States by $1,000 on April 1.

Tesla’s prices have been all over the place for a while now, but this is the first time in a bit that we’ve actually seen prices increase. This will surely save the automaker from a terrible Q1 report.

Reverse: A Lame Move By Tricky Dicky